Gasoline prices increase as temperatures drop

View full sizeDave Dieter/Huntsville TimesThe average cost of a gallon of regular gasoline has increased 20 cents in Huntsville in the past month from $2.73 to $2.93, and costs 43 cents more than a year ago.

HUNTSVILLE, AL. - If gasoline just before the New Year costs $2.93 a gallon in Huntsville and $3.05 nationally, what will it cost next summer when gasoline is traditionally more expensive?

Gasoline costing $4 a gallon is not out of the question for 2011, he said Tuesday. The highest average cost of a gallon of gasoline in Huntsville was $4.12 on Sept. 16, 2008 and nationally was $4.11 on July 17, 2008, according to AAA's Daily Fuel Gauge Report.

The average cost of a gallon of regular gasoline has increased 20 cents in Huntsville in the past month from $2.73 to $2.93, and costs 43 cents more than a year ago, according to AAA.

Nationally, the average of nearly $3.05 is 45 cents more than a year ago and 21 cents more than a month ago.

Gilligan blames speculators in the oil futures market and a devalued dollar for driving up the price of crude oil, which affects the price of gasoline.

Mike Segrest, president and chief executive officer of The Spencer Companies, said the company's cost for a gallon of gasoline from the Birmingham terminal has increased 49 cents from Sept. 1 to Monday.

Spencer operates Shell and BP stations in the area.

"All we're doing is passing along the increases," he said Tuesday.

Segrest said he is puzzled by the high price of gasoline this winter.

"The demand is not particularly high and the supply is not particularly low," he said.

Gilligan said the demand for oil has not justified the cost of a barrel of oil on the futures market increasing from $70 to $90 in the past two months.

"It really has everything to do with the futures prices," he said.

Crude oil futures for delivery in February climbed to more than $91 a barrel Tuesday.

Each $1 increase in the price of a barrel of oil translates into a 5-cent increase for a gallon of gas at the pump within 24 hours, Gilligan said.

"We'd like to see prices reflect supply and demand," Gilligan said. "What prices reflect now is investor demand."

Speculators in the market buy contracts for oil delivery with no intention of ever taking possession of the oil, he said. They buy the contracts as an investment to drive the price up, he said.